Pimco and Fortress buy €17.7bn of bad UniCredit loans

The Italian bank has been on a drive to shore up its finances, in part through asset disposals

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By

Clare Dickinson

July 17, 2017 Updated: 1:17 p.m. GMT

Pimco, the world's biggest bond manager, and investment manager Fortress have struck a deal to buy a €17.7bn portfolio of bad loans from Italian bank UniCredit, which has been on a drive to clean up its balance sheet.

The sale of the non-performing loans is part of UniCredit's strategic plan, outlined in December last year, in which it pledged to de-risk its balance sheet through asset disposals.

The deal will complete further to the issuance of asset-backed securities notes, which is expected by the end of the month, according to a statement from the bank today. The price paid for the portfolio was not disclosed.

Italian banks have been hit by investor fears over bad loans and their profitability.

In November, UniCredit announced plans to raise €13bn as part of efforts to improve its finances. The rights issue was kicked off in February but the new shares were discounted by 38% and UniCredit's share price plummeted in response.

It has since partly recovered, but its shares are still down around 42% this year.